ISLAMABAD: Senate Standing Committee on Finance recommended that the policy framework under Pakistan Remittance Initiative (PRI) be revisited to bring transaction costs to a reasonable level for overseas Pakistanis.
The Committee Wednesday received a briefing on the Pakistan Remittances Initiative (PRI), with particular focus on changes to incentive schemes over the years, including applicable rates and their financial implications.
The Committee was informed that the charges for Money Transfer Operators (MTO) on remittance inflows went up from Rs 1 to Rs 4.5 per transaction.
Govt decides to review Pakistan Remittances Initiative
Under the Pakistan Remittance Initiative (PRI), the country’s remittances touched historic heights of USD38 billion, so the fee charges for banks and MTOs went up to Rs 130 billion, mainly because the government has increased the charges based on an incremental increase from an average 20 Riyal per transaction to 35 Saudi Riyal. Hence, this incentive package resulted in increasing the remittances.
Now, it has been slashed down to 20 Riyals per transaction, the Executive Director of the State Bank of Pakistan, Inayat Hussain, told the Senate Standing Committee on Finance, which met under the Chairmanship of Senator Saleem Mandviwalla here on Wednesday.
The SBP official said that the per-transaction cost of remittances in country was hovering around USD8.2, while in India it was USD10.2, and Bangladesh USD13.9.
The SBP high-up briefed the committee that the government will spend Rs80 to Rs100 billion this fiscal year on the incentive scheme for remittances. Mandviwalla suggested that the central bank should reverse the increase and restore the Re1 level, arguing that overseas Pakistanis are not benefiting from the higher charges, which are only adding profits for banks and MTOs.
SBP Executive Director Dr Inayat Hussain informed the committee that last year, the government paid Rs. 124 billion under the incentive package to subsidize deductions on remittances.
Now, in order to reduce the size of the incentive package, the government has fixed 20 Saudi Riyals per transaction, applicable to transfers of a minimum of USD200. Last year, the scheme offered between 20 and 35 riyals per transaction. He explained that depreciation of the rupee had contributed to the increase in operator charges.
Senator Vawda disclosed that the MTOs were involved in breaking down the transferred amount in order to increase their fee charges.
The Chairman of the Senate panel also inquired about the charges collected by Visa and Master Cards on the credit cards in US dollars, thus transferring around USD130 million on an annual basis. Dr Inayat Hussain informed the committee that 70 percent of cards in use in Pakistan are Visa and MasterCard, while 30 percent are PayPak.
Chairman Senator Saleem Mandviwalla observed that while the initiative was established to support overseas Pakistanis, the benefits were in many cases being absorbed by banks and money transfer operators rather than the remitters themselves. He emphasised the importance of rationalising costs to ensure that beneficiaries in Pakistan receive the maximum value of remittances.
The Minister of State for Finance and Revenue assured members that the matter would be reviewed with the State Bank and relevant stakeholders to simplify the mechanism and safeguard against misuse.
The Committee considered the Government Bill titled “The Virtual Assets Bill, 2025”, referred by the House on 15 August 2025. While the matter had been taken up in the previous sitting, members once again underscored the need for further clarity from the concerned authorities. Therefore, the Committee decided to postpone further consideration until the head of the proposed regulatory authority is available to brief the members directly.
Copyright Business Recorder, 2025
Comments
Comments are closed for this article.